28 July, 2021
A Quick Guide for Company Formation in UAE
Asif has a great idea and wishes to monetize it by formally setting up a business in Dubai. But Asif has more questions than answers. Where should he start?
Rehana is interested in turning into an entrepreneurship and realizing the true potential of her education and experience. She has a solid idea but does not know how to engage in company formation in Dubai. Where can she begin?
Businessmen like Rehana or Asif face this dilemma almost every day. It is not easy to engage in a business setup in Dubai without the help of a company offering corporate support services. We had focused on the value addition of a corporate service provider in our earlier blog column.
So, where should businessmen start?
Where do I Start?
Company formation in Dubai is quite easy, and there are professional companies that help you with this process. In our earlier blog column, we had focused on why it is good to engage in a business setup in Dubai.
Still, if you trust your own ability and instincts, then the first step recommends that you ensure that your passport does not expire in a few months, and it should also have at least 3 pages for visa stamping. Prepare multiple copies of the necessary documents and take pictures on your mobile device as a backup. After this, make sure all documents are notarized. It is to be noted, however, that since the different emirates have different authorities, the document list can vary quite a bit from emirate to emirate. So, it is a good idea to ensure there is no overlap in documents.
Be smart, and take the help of experts to help you in your business setup in Dubai.
Best Jurisdiction for Business Setup
You will want to decide where your company will be located and what jurisdiction will govern your business. Simply put, you can opt for offshore, mainland, or the most popular, a free zone. UAE is home to several different free zones that cater to people starting up a business. Free zones are home to thousands of startups and multinationals, with new entrants every year. Popular free zones include Jebel Ali Free Zone (JAFZA), Dubai Airport Free Zone (DAFZA), and Dubai Multi Commodities Centre (DMCC). Setting up in a special economic zone is rather convenient as the company can usually benefit from not paying any tariffs/duty on goods traded.
To get the best out of a freezone business setup, do read our earlier blog column.
Forming any company is not the easiest of tasks, and this applies to Dubai as well. Thus, it is important you set up a startup in an established environment that eases business. If, however, your company provides a niche product or service, and capital is a non-issue, one can setup in the mainland company in order to be closer to your customers.
Decide on the Business Activity before Company Formation in Dubai
It is of paramount importance that your company has a clear and achievable target in mind. In order to do this, a business plan must be created. You can either do this yourself or with the help of a consultant. The next step will be to select your business activities, you have the option to choose single or multiple activities. License fees will vary accordingly. Further, you need to provide three names for the new company established in Dubai, as the authorities will approve one of them. For further guidance in this respect, it is recommended to consult a professional business setup company, such as Corporate Business Services. Next, understand the minimum resource requirement for company setup, this includes the core team and ground-level staff. Your licensing package cost will depend on the number of visa allocations required for business setup in Dubai. Accordingly, you need to budget for the cost towards residence visa processing fees, Emirates ID, health insurance, and workman compensation insurance.
Competition and Market Analysis
You should be aware of who your competition is and conduct the necessary market research and analysis. It is recommended to use a professional consultant if it is within your budget, as these services provide a comprehensive package all under one roof. Also, understand your banking requirements and do your research by meeting different banks to understand which fits your requirements the best. This is because each bank has different schemes and has its own unique selling point. Furthermore, you should have a clear picture of whether your new business setup requires overdraft facilities or a letter of credit facilities from the bank. These bank facilities will be dependent upon the payment terms of your supplier(s). Finally, do not forget to forecast your cash flow requirement for the business, this will be directly linked to your payment terms to your customers.
To start your company formation in Dubai, do reach out to us for a free consultation.